Less Freedom for Employers to Contract: The Oregon Legislature Toughens Laws on Noncompete Agreements

On August 6, Governor Ted Kulongoski signed Senate Bill 248 into law, making more onerous the requirements for a valid noncompetition agreement between employers and their employees. Oregon law now makes noncompete agreements voidable unless all of the following four requirements are met:

1. The employer informs the employee that a signed non-compete agreement is a required condition of employment. This notification must be given to the employee in a written

employment offer at least two weeks before the employee’s first day of work.

2. The employee is an individual engaged in administrative, executive, or professional work who: (a) performs predominately intellectual, managerial or creative tasks; (b) exercises discretion and independent judgment; and (c) is paid on a salary basis.

3. The employer has a “protectable interest.” A protectable interest means either (a) has access to trade secrets; (b) has access to competitively sensitive confidential business or professional information (i.e., product development plans, product lunch plans, marketing strategy or sales plans); (c) on-air talent.

4. The total amount of employee’s gross salary and commissions on an annual basis at the time of termination exceeds the median family income for a family of four as determined by the United States Census Bureau.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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